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Budget cuts pummel public colleges and U.S. standing

By Michael Connor

MIAMI (Reuters) - At the University of Central Florida, the provost's bi-monthly e-mails are now virtually required reading for 56,235 students.

But they don't cover sports or campus fraternities. Instead they detail budget woes in Florida's capital and how they will affect tuition, staffing and research at America's second-largest university, begun a half century ago to train workers for America's space program.

"The interest in budget updates is high, as well as the anxiety," said Grant Heston, a UCF spokesman. "A sense of 'What is next?' can be felt on campus."

Like UCF, America's other public colleges are bracing for a run of lean years as states stay tight-fisted, tuition hikes get tougher and worries take root that a malnourished higher education system will stunt the U.S. economy for years.

At stake is whether the United States will keep its role as the world's pre-eminent business and economic leader as it comes under pressure from China and India, which are turning out tens of thousands of highly trained engineering and technology graduates.

"Cutbacks in education are going to really impede our ability to compete in the future," said Joseph Stiglitz, a Nobel laureate in economics and professor at Columbia University. "The question is, 'Will we be making the investment in people and skills to make ourselves competitive?'"

Policymakers at the schools that educate three-quarters of America's 18.2 million college students are eyeing more layoffs, eliminating degree programs and campuses, and giving slots to higher-paying students from outside home states.

Governors in Pennsylvania, Nevada, Washington, Texas, California and at least another 15 states are seeking steep cuts in aid to higher education. Since the U.S. recession began in late 2007, 43 state governments have already cut aid to state university systems.

"Our higher ed system is at the breaking point," Washington state Rep. Larry Seaquist said during a state House hearing on cutting aid to Washington's four-year state colleges. "It just looks like wall-to-wall problems."

The cuts come as state governments anticipate another year of revenues enfeebled by the U.S. housing crisis, weak consumer spending and the slow U.S. economic expansion. Federal aid that had softened some of the revenue slide is ending.

State governments' tax collections fell $14.3 billion to $704.6 billion in fiscal 2010, which ended last June, according to the U.S. Census. That was down 2 percent from fiscal 2009 but milder than that year's drop of $65.8 billion from fiscal 2008.

To make matters worse, budget gaps among states for the 12 months starting July 1 total at least $112 billion.

Microsoft founder Bill Gates has said that many states are making a mistake by cutting education funding to close budget gaps.

"The bottom line is we need to care about state budgets because they're critical for our kids and our future," Gates was quoted as saying at a March 3 Technology, Education, Design Conference in Long Beach, California. "If we make the wrong choice, education won't be funded the right way."

"State support of public universities -- on the decline since the 1980s -- is likely to dwindle further as most states face the loss of federal stimulus funding and the economy continues its slow recovery," said Edith Behr, a vice president and senior analyst at Moody's Investors Service.

CUTS SPUR PROTESTS, CONCESSIONS

Tuition hikes and enrollment curbs have spurred protests, such as one in early March on the Las Vegas Strip that came as the University of Nevada at Las Vegas considered filing a watered-down type of bankruptcy called "financial exigency."

The hundreds who marched outside the Strip's casinos, as well as other protests on campuses and at Nevada's legislature, were resisting $162 million of proposed cuts in aid to public colleges. Legislators are weighing requests that may force program closures and implement a 75 percent tuition rise.

While protests in Nevada have stirred concerns, few are predicting the riots seen across the United Kingdom late last year after university tuition fees were tripled.

Student fees and tuition vary widely at America's public universities and comparisons of student costs are further complicated by dizzying arrays of aid packages, scholarships and the considerably higher charges laid on out-of-state residents attending a state college.

Since 1970, fees and tuition at public universities have risen by a multiple of 16 from an average for in-state residents of $478, to $7,630 in 2009, according to education center data. Increases were 135 percent during the 1980s, 85 percent in the 1990s and 91 percent between 2000 and 2009.

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